MAPSONG PC v. BLUE SHIELD OF CALIFORNIA LIFE AND HEALTH INSURANCE COMPANY (2024)

ORDER GRANTING DEFENDANT'S MOTION TO DISMISS [Dkt. 28] AND DISMISSING PLAINTIFF'S FIRST AMENDED COMPLAINT WITH PREJUDICE

I. INTRODUCTION & BACKGROUND

In this case, Plaintiff Mapsong PC, doing business as New Way Therapy Services (“Mapsong”), alleges that Defendant Blue Shield of California Life and Health Insurance Company (“Blue Shield”)¹ failed to fully compensate it for nonemergency behavioral health services it provided to thirteen patients at its outpatient clinic between April 2021 and July 2022. (Dkt. 27 [First Amended Complaint, hereinafter “FAC”] ¶¶ 13–14, Ex. 1.) Mapsong has no contract with Blue Shield, and when Mapsong billed Blue Shield for services provided to Blue Shield members, Blue Shield paid less than the full billed charges ² despite the fact that Mapsong alleges it “was entitled to 100% of its billed charges which represented the customary and reasonable value of Mapsong's services.” (Id. ¶¶ 6–7, 16–18.) Mapsong's theory is that “Blue Shield paid, and/or agreed to pay, 100% of Mapsong's billed charges” when Mapsong previously provided services to Blue Shield members, and that before Mapsong provided services to the patients at issue in this case, it “contacted Blue Shield and/or its agents via telephone to verify eligibility for insurance coverage and request authorization,” and “Blue Shield and/or its agents issued authorization to cover the full extent of services provided to Patients and agreed to pay 100% of [Mapsong's] billed charges – which represents the customary and reasonable value of Mapsong's services – based on the parties’ prior transactions.” (Id. ¶¶ 5, 15, 19.)

The Court granted Blue Shield's motion to dismiss the Complaint with leave to amend. (Dkt. 26.) Now before the Court is Blue Shield's motion to dismiss Mapsong's FAC. (Dkt. 28 [“Mot.”].) For the following reasons, the motion is GRANTED.³

II. LEGAL STANDARD

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests the legal sufficiency of a plaintiff's claims. The issue on a motion to dismiss for failure to state a claim is not whether the plaintiff will ultimately prevail but whether the plaintiff is entitled to offer evidence to support the claims asserted. Gilligan v. Jamco Dev. Corp., 108 F.3d 246, 249 (9th Cir. 1997). Rule 12(b)(6) is read in conjunction with Rule 8(a), which requires only “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). When evaluating a Rule 12(b)(6) motion, the district court must accept all material allegations in the complaint as true and construe them in the light most favorable to the non-moving party. Skilstaf, Inc. v. CVS Caremark Corp., 669 F.3d 1005, 1014 (9th Cir. 2012). To survive a motion to dismiss, a complaint must contain sufficient factual material to “state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). Determining whether a complaint states a plausible claim for relief is “a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Ashcroft v. Iqbal, 556 U.S. 662, 679, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).

III. DISCUSSION

Mapsong alleges claims for (1) breach of implied contract, (2) unjust enrichment, (3) quantum meruit, (4) open book account, and (5) violation of California's Unfair Competition Law (“UCL”). (Id. ¶¶ 23–72.) Mapsong again fails to sufficiently plead its claims.⁴

A. Breach of Implied Contract

Mapsong's first claim asserts that Blue Shield breached an implied contract between the parties. (FAC ¶¶ 23–37.) An implied-in-fact contract is “an agreement, the existence and terms of which are manifested by conduct.” Pac. Bay Recovery, Inc. v. California Physicians’ Servs., Inc., 12 Cal. App. 5th 200, 215, 218 Cal.Rptr.3d 562 (2017). The basic elements of an express contract and an implied contract are the same: there must be “mutual assent (usually accomplished through the medium of an offer and acceptance) and consideration.” Id. Both types of contract “require a meeting of minds or an agreement.” Id. To sufficiently allege an implied contract claim, a plaintiff “must allege facts about the specific terms of its agreement or agreements with a defendant.” ABC Servs. Grp., Inc. v. United HealthCare Servs., Inc., 2019 WL 4137624, at *6 (C.D. Cal. June 14, 2019), affirmed in relevant part in ABC Servs. Grp., Inc. v. Aetna Health & Life Ins. Co., 2022 WL 187849, at *1 (9th Cir. Jan. 20, 2022).

Mapsong's allegations fall short of this standard. Mapsong alleges that it “communicated with or attempted to communicate with Blue Shield and confirmed Patients’ health care coverage for the behavioral health services” and “either obtained authorization from Blue Shield or its agents to perform the services or was told by Blue Shield or its agents that no authorization was needed.” (FAC ¶¶ 25–26.) It further alleges that when Blue Shield authorized Mapsong to provide the services, it knew it had no written contract with Mapsong and thus was not entitled to discounts on Mapsong's billed charges, and also knew the price of Mapsong's services based on previous transactions in which Blue Shield “paid, and/or agreed to pay, 100% of Mapsong's billed charges for the same services rendered to other members and/or insureds of Blue Shield's health plans and/or health insurance policies.” (Id. ¶¶ 27–28.) And it alleges that the “verification and the authorization and request by Blue Shield that Mapsong treat Patients amounted to an agreement between Blue Shield and Mapsong that Mapsong would care for and treat Patients, and in exchange, Blue Shield would pay or reimburse Mapsong for the services provided at 100% of Treadstone's ⁵ billed charges which represents the customary and reasonable value of said services.” (Id. ¶ 25.)

But Mapsong alleges no facts regarding the terms of any implied agreement with Blue Shield that covered the services Mapsong provided to the patients at issue. ABC Servs. Grp., 2019 WL 4137624, at *6 (“Plaintiff broadly allegedly that it requested pre-authorizations from Defendants, and that Defendants represented that they would reimburse Plaintiff for its services,” but “Plaintiff fails to state any facts that would support a meeting of the minds or an agreement with specific terms.”); Ata Mazaheri, M.D., Inc. v. UnitedHealthcare Ins. Co. Inc., 2023 WL 5167362, at *3 (C.D. Cal. July 10, 2023) (“Plaintiff still fails to allege facts demonstrating a meeting of the minds regarding the key term in dispute – the price of the services rendered.”). Its vague allegations that it “communicated with or attempted to communicate with Blue Shield” and obtained authorization or was told none was needed, and that Blue Shield knew it was not entitled to discounts and had previously paid Mapsong's billed charges “lack the specific facts required for [the Court] to determine there was any meeting of the minds between the parties.” Pac. Bay Recovery, 12 Cal. App. 5th at 216, 218 Cal.Rptr.3d 562; (FAC ¶¶ 25–28). Critically, there is no indication that the parties had a meeting of the minds regarding “the basic terms, like what services were to be provided, who would provide them, the cost, or the time frame.” TML Recovery, LLC v. Humana Inc., 2019 WL 3208807, at *4 (C.D. Cal. Mar. 4, 2019). Put differently, the communications Mapsong alleges it had with Blue Shield do not reflect an implied promise by Blue Shield to pay the full amount of Mapsong's billed charges for the services the relevant patients received. See DeLeon v. Verizon Wireless, LLC, 207 Cal. App. 4th 800, 813, 143 Cal.Rptr.3d 810 (2012) (“Mutual consent necessary to the formation of a contract is determined under an objective standard applied to the outward manifestations or expressions of the parties, i.e., the reasonable meaning of their words and acts, and not their unexpressed intentions or understandings.”) (cleaned up); see also Pac. Bay Recovery, 12 Cal. App. 5th at 216, 218 Cal.Rptr.3d 562 (“The fact that Blue Shield only paid for six of the 31 days of treatment undermines Pacific Bay's claim that the parties ever agreed to the same contractual terms.”).

Contrary to Mapsong's argument that “the parties’ course of conduct [ ] has led to the creation of implied-in-fact agreements between them,” (Opp. at 23), allegations like Mapsong's that a service provider merely “expected to be paid based on verifications of benefits [with patients’ insurance provider], trade custom, and prior course of dealing” are not sufficient to state an implied-in-fact contract claim. Humana Inc., 2019 WL 3208807, at *4.; see TML Recovery, LLC v. Cigna Corp., 2021 WL 5238575, at *1, *5 (C.D. Cal. Mar. 29, 2021) (granting motion to dismiss similar claim based on prior authorization and allegation that insurer was aware that the plaintiffs were treating and providing services to the patients and “were advised and fully aware of Plaintiffs’ corresponding charges”)⁶ ; Stanford Health Care v. Blue Cross Blue Shield of N. Carolina, Inc., 2022 WL 195847, at *7 (N.D. Cal. Jan. 21, 2022) (“Stanford has failed to adequately plead a breach of implied contract claim based on its allegations regarding BCBS's verification of benefits, authorization of services, and partial payment regarding Stanford's alleged services to BCBS-insured patients.”). Indeed, “within the medical insurance industry, an insurer's verification is not the same as a promise to pay.” Humana Inc., 2019 WL 3208807, at *4 (internal quotation omitted). “At best, [Mapsong's] allegations show that [Blue Shield] admitted that the subscriber was covered under one of [its] health plans and that [it] would pay something for [Mapsong's] treatment of the subscriber. What type of treatment or the extent of treatment is not described. In addition, it does not appear the parties reached any sort of agreement as to the rate [Blue Shield] would pay [Mapsong].” Pac. Bay Recovery, 12 Cal. App. 5th at 216, 218 Cal.Rptr.3d 562 (affirming dismissal of implied contract claim based on virtually identical allegations).⁷

B. Unjust Enrichment

Mapsong alleges in the alternative to its implied contract claim that Blue Shield owes Mapsong's full billed charges on an unjust enrichment theory. (FAC ¶ 44.) “While California case law appears unsettled on the availability of [an independent unjust enrichment] cause of action, [the Ninth] Circuit has construed the common law to allow an unjust enrichment cause of action through quasi-contract.” ESG Cap. Partners, LP v. Stratos, 828 F.3d 1023, 1038 (9th Cir. 2016); see Astiana v. Hain Celestial Grp., Inc., 783 F.3d 753, 762 (9th Cir. 2015) (explaining that when a plaintiff alleges unjust enrichment, a court may “construe the cause of action as a quasi-contract claim seeking restitution”). “To allege unjust enrichment as an independent cause of action, a plaintiff must show that the defendant received and unjustly retained a benefit at the plaintiff's expense.” ESG Capital Partners, LP v. Stratos, 828 F.3d 1023, 1038–39 (9th Cir. 2016); see Bruton v. Gerber Prod. Co., 703 F. App'x 468, 470 (9th Cir. 2017) (reversing dismissal of an unjust enrichment claim in action regarding food labeling because “the California Supreme Court has clarified California law, allowing an independent claim for unjust enrichment to proceed in an insurance dispute”).

Mapsong fails to adequately allege that Blue Shield unjustly retained a benefit at Mapsong's expense. See ESG Capital Partners, LP, 828 F.3d at 1038–39. When a person incidentally benefits another person while performing his own duty or furthering his own aims, the incidentally-conferred benefit is not unjust enrichment. California Med. Ass'n, Inc. v. Aetna U.S. Healthcare of California, Inc., 94 Cal. App. 4th 151, 174, 114 Cal.Rptr.2d 109 (2001) (collecting authority). Any benefit Blue Shield received from Mapsong treating its members “was simply an incident to” Mapsong performing its own obligations to patients seeking treatment. These circumstances do not support an unjust enrichment claim. See id. (affirming dismissal without leave to amend of quasi-contract claim).

C. Quantum Meruit

Mapsong alleges in the alternative that Blue Shield owes Mapsong's full billed charges based on a quantum meruit theory. (FAC ¶ 54.) “Quantum meruit permits the recovery of the reasonable value of services rendered.” Pac. Bay Recovery, 12 Cal. App. 5th at 214, 218 Cal.Rptr.3d 562. To state a quantum meruit claim, a plaintiff must plausibly allege “both that he or she was acting pursuant to either an express or implied request for services from the defendant and that the services rendered were intended to and did benefit the defendant.” ABC Servs. Grp., 2019 WL 4137624, at *7 (quoting Ochs v. PacifiCare of California, 115 Cal. App. 4th 782, 794, 9 Cal.Rptr.3d 734 (2004)).

Mapsong's allegations that it provided services to the relevant patients only because Blue Shield requested that Mapsong do so are not plausible. (See FAC ¶¶ 47, 55.) Mapsong alleges that it called Blue Shield to confirm patients’ coverage and obtain treatment authorization. (Id. ¶¶ 25–26.) It would not have done so if the patients had not first asked Mapsong to provide services. Stanford Health Care, 2022 WL 195847, at *9 (“Since BCBS's patients allegedly requested the services at issue in this case, and Stanford allegedly initiated contact with BCBS to verify coverage and seek authorization, Stanford has not adequately alleged that BCBS requested the services at issue.”) (collecting cases). It is clear that the people asking Mapsong to provide services were the patients, not Blue Shield. Cedars Sinai Med. Ctr. v. Mid-W. Nat. Life Ins. Co., 118 F. Supp. 2d 1002, 1013 (C.D. Cal. 2000) (granting motion to dismiss quantum meruit claim on similar reasoning, concluding, “[b]ecause Mid–West did not request, either expressly or impliedly, that Cedars treat Bernheim, it is not liable to Cedars under quantum meruit theory”); Pac. Bay Recovery, 12 Cal. App. 5th at 215, 218 Cal.Rptr.3d 562 (affirming dismissal of quantum meruit claim when the plaintiff “simply decree[d] it was not paid enough and offer[ed] conclusory allegations that [Defendant] requested [Plaintiff] treat the subscriber”). At most, Blue Shield verified coverage and indicated it would allow for treatment, not that Blue Shield actually requested Mapsong provide the services. See ABC Servs. Grp., Inc., 2022 WL 187849, at *2 (finding district court correctly dismissed quantum meruit claim on this basis). Moreover, the services Mapsong provided the patients did not benefit Blue Shield because “services provided by medical providers to patients do not inure to the benefit of insurers.” Armijo v. ILWU-PMA Welfare Plan, 2015 WL 13629562, at *24 (C.D. Cal. Aug. 21, 2015); see Stanford Health Care, 2022 WL 195847, at *10 (granting motion to dismiss quantum meruit claim because “Stanford can only plausibly allege a direct benefit to BCBS's members, which courts have consistently found not to be sufficient for a quantum meruit claim”).

D. Open Book Account

Mapsong alleges in the alternative that Blue Shield owes Mapsong's full billed charges based on an open book account theory. (FAC ¶ 68.) Under California law,

The term “book account” means a detailed statement which constitutes the principal record of one or more transactions between a debtor and a creditor arising out of a contract or some fiduciary relation, and shows the debits and credits in connection therewith, and against whom and in favor of whom entries are made, is entered in the regular course of business as conducted by such creditor or fiduciary, and is kept in a reasonably permanent form and manner and is (1) in a bound book, or (2) on a sheet or sheets fastened in a book or to backing but detachable therefrom, or (3) on a card or cards of a permanent character, or is kept in any other reasonably permanent form and manner.

Cal. Civ. Proc. Code § 337a. To state an open book account claim, a plaintiff must plausibly allege that the parties had an agreement, express or implied, on the amount due and that the debtor promised, expressly or impliedly, to pay the amount due. Coste v. Fox Beverages USA Inc., 2023 WL 8522987, at *10 (C.D. Cal. Oct. 10, 2023).

Mapsong fails to plausibly allege that there was any agreement between the parties regarding the amount Blue Shield would pay for the services regarding which Mapsong sought prior authorization or that Blue Shield promised to pay Mapsong its full billed charges for those services. See id. Mapsong's general allegations that it previously provided services to Blue Shield members for which Blue Shield paid the full billed charges are insufficient to plausibly allege that the parties intended for an open book account to be created for Maspong's full billed charges each time Mapsong later called Blue Shield to seek prior authorization. See Maggio, Inc. v. Neal, 196 Cal. App. 3d 745, 752, 241 Cal.Rptr. 883 (Ct. App. 1987) (finding “insufficient evidence to support the finding of an open book account” when there was “no evidence of an agreement between the parties that the loans to Neal would be carried as a book account” and the parties’ conduct did not “show that they intended or expected such an account would be created”).

E. UCL

Finally, Mapsong alleges that Blue Shield's “practice of paying non-participating behavioral health care providers arbitrary amounts that are well below the cost, value, and common range of fees for the medically necessary behavioral health services the providers rendered” is “unlawful, unfair and/or fraudulent” under the UCL because it violates California Insurance Code section 10144.57. (FAC ¶¶ 40–41.) Blue Shield moves to dismiss Mapsong's UCL claim, describing in detail why section 10144.57 does not apply to the circumstances here, including that the statute is not retroactive and Mapsong treated the patients at issue after the statute's effective date, and that the statute applies to post-stabilization care following a behavioral health crisis, which Mapsong does not allege it provided. (Mot. at 12–13.) Blue Shield also explains why Mapsong's allegations are insufficient to show unfair or fraudulent conduct under the UCL. (Id.) In opposition, Mapsong's only response is that its “allegations that [Blue Shield] failed to pay [Mapsong] for the non-emergent or ‘nonemergency’ clearly and adequately demonstrates [Blue Shield's] unlawful act in violation of the Insurance Code section 10144.57[(d)(1)].” (Opp. at 27.) Mapsong's failure to engage on any level with Blue Shield's arguments that section 10144.57 does not apply to the factual circumstances Mapsong alleges concedes that Mapsong fails to state a claim under the UCL. See Kroeger v. Vertex Aerospace LLC, 2020 WL 3546086, at *8 (C.D. Cal. June 30, 2020) (collecting authority).

F. Leave to Amend

“Although leave to amend ‘shall be freely given when justice so requires,’ it may be denied” when it “would not serve any purpose because to grant it would be futile in saving the plaintiff's suit.” Chinatown Neighborhood Ass'n v. Harris, 794 F.3d 1136, 1144 (9th Cir. 2015) (quoting Fed. R. Civ. P. 15(a)). That is the case here. The Court already dismissed these claims in Mapsong's Complaint based on the same deficiencies this order identifies, and Mapsong failed to cure the deficiencies despite being given the opportunity to do so. (See Dkt. 26.) Nothing in the record suggests that Mapsong could allege any new facts that would suffice to plausibly state its claims, and Mapsong does not offer any explanation regarding how further amendment could cure the identified deficiencies. See Vieira v. Mentor Worldwide, LLC, 392 F. Supp. 3d 1117, 1130 (C.D. Cal. 2019), aff'd, 845 F. App'x 503 (9th Cir. 2021) (“The Court denies leave to amend because Plaintiffs have not explained how further amendment could cure the pleading deficiencies in their Complaint.”).

IV. CONCLUSION

For the foregoing reasons, Blue Shield's motion to dismiss is GRANTED, and Mapsong's First Amended Complaint is DISMISSED WITH PREJUDICE.

FOOTNOTES

1.   Though Mapsong's Complaint named only Blue Shield as a defendant, it later filed a Doe amendment naming California Physicians Service dba Blue Shield of California (“BSCal”) as another defendant. In the FAC, Mapsong again pursues claims only against Blue Shield, the sole original defendant. In the motion, Blue Shield argues BSCal should be dismissed. (Mot. at 4–5.) Mapsong's failure to address this argument in opposition confirms that Blue Shield is the only defendant remaining in this case.

2.   In the Complaint, Mapsong alleged it billed Blue Shield $154,000, but Blue Shield paid only $2,760.47. (Compl. ¶¶ 14–15.) In the FAC, Mapsong alleges it billed Blue Shield $126,398.60, but Blue Shield paid only $4,837.19. (FAC ¶¶ 16–17, 51.) Nothing explains this change, and indeed the exhibit attached to the FAC reflects the amounts stated in the Complaint, not the FAC. (FAC Ex. 1.) It appears the numbers appearing in the FAC reflect a dupe and revise error since those numbers apply in another case Mapsong's counsel is litigating against Blue Shield on behalf of a different plaintiff. See Treadstone Services dba Redefine Medical Services v. Blue Shield of California Life and Health Insurance Company, C.D. Cal. Case No. SACV 23-01889-CJC (KESx), Dkt. 1.

3.   Having read and considered the papers the parties presented, the Court finds this matter appropriate for disposition without a hearing. See Fed. R. Civ. P. 78; Local Rule 7-15. Accordingly, the hearing set for April 8, 2024, at 1:30 p.m. is hereby vacated and off calendar.

4.   Because the Court determines that Mapsong's claims are all insufficiently pled, it need not address Blue Shield's arguments that its claims as to certain patients are preempted by FEHBA or ERISA. See, e.g., Cader v. Wells Fargo, NA, 2011 WL 13254124, at *8 (N.D. Cal. Dec. 19, 2011) (“The Court need not address preemption because the FAC fails to state a claim.”); Clark v. Westbrae Nat., Inc., 2021 WL 1580827, at *6 (N.D. Cal. Apr. 22, 2021) (“Because the Court has concluded that Plaintiff's SAC fails to state a claim, it need not and does not address Defendant's preemption, standing, or restitution arguments.”).

5.   This appears to be another dupe and revise error. Also notable is the fact that the statement of facts in Mapsong's opposition refers at least thirteen times to the defendant in this case as “Aetna,” an entity appearing to have no relation to Blue Shield at all. (Opp. at 8–9.)

6.   Mapsong attempts to distinguish TML on the basis that TML dealt with “ ‘broad allegations’ pertaining to ‘prior course of dealing,’ ” whereas Mapsong “specifically alleges that [Blue Shield] has paid it 100% of its billed charges for the same services it had rendered to the same patients.” (Opp. at 23 [emphasis in original].) But there is nothing specific about Mapsong's allegations at all. In fact, the same allegations support different entities’ complaints against Blue Shield, including in the Treadstone matter the Court previously referenced. The fact that Mapsong's counsel alleges the same facts on behalf of different entities confirms that there are no facts particular to Mapsong that plausibly created implied-in-fact contracts.

7.   Mapsong's theory—that because it had no contract with Blue Shield, and because Blue Shield has allegedly previously paid Mapsong's full billed charges, Blue Shield was required to pay Mapsong's full billed charges in every case in which Mapsong called Blue Shield to confirm coverage and obtain authorization—is also implausible because it is inconsistent with the structure of insurance coverage. Accepting Mapsong's theory would put it in the same or better position as an entity that does have a contract with Blue Shield. But insurance companies are allowed to “deliberately discourage[ ] members from going out of network by paying lower reimbursement rates and holding the member responsible for the unpaid balance” to out-of-network providers. Orthopedic Specialists of S. California v. Pub. Employees’ Ret. Sys., 228 Cal. App. 4th 644, 648, 175 Cal.Rptr.3d 295 (2014) (explaining that when insureds “seek[ ] treatment with an in-network provider, [the insurer] can better control healthcare costs because the parties have agreed in advance upon the price and [the insurer] can use the resulting savings to provide better or lower cost coverage”).

CORMAC J. CARNEY, UNITED STATES DISTRICT JUDGE